Heard on the Trading Floor's Threads

Mar 4, 2023 • 16 tweets • 5 min read

Today I woke up to the surprise of hitting 3000 @SubstackInc subscribers 🥳. I know it's not much and there are plenty of more successful writers out there but this is a small victory I never thought achievable back in Aug'22 when we launched.

Few lessons I learnt along the way:

Many traders/investors use Substack to source trading ideas from. This new idea distribution channel is breaking the previously high barrier to entry of private wall street research. There are very clever authors out there putting their everything to produce excellent content.

Mar 3, 2023 • 6 tweets • 3 min read

Before I sign off I wanted to show you a chart I stumbled upon in today's am/FX by @donnelly_brent (you miss a lot if you do not follow/subscribe)

In this market more than ever, one has to be open minded.

Daily observations below after which go read the rest of his piece 👇

@donnelly_brent Under the radar📡:

1. Relative strength: megas, $XHB, $XME
#relativestrength
2. Relative weakness: $XLP, $SMH, $HG_F
#relativeweaknes

Mar 3, 2023 • 11 tweets • 3 min read

Have you guys considered pair trading? Because I love it.

We did a few write-ups on how we do that in the FI world and I thought it might be appropriate to shed some more light on them

First, let's start with why we like to structure trades with ETF pairs 👇 Pair trading has some unanimous advantages:

↕️ Market neutral strategy
❌ Lack of idiosyncratic risks.
💡Ability to express an idea/theme
⚙️ Clear trade management
🪜 Scalability
🌊 Liquidity and borrow

Now, onto some real world examples 👇

Mar 2, 2023 • 7 tweets • 3 min read

Let's go back to the previous times gaps ups / downs were bought / faded with relation to inflation (= you are invited to have a look at my memory bias)

The chart and subsequent observations are below, the takeaway is up to you but I got my short expo decreased

Under the radar📡:

1. Relative strength: $XLP, $XLU, $XLV, $XME, fertilzers
#relativestrength
2. Relative weakness: $XLY, $SMH, $KRE
#relativeweaknes

Mar 1, 2023 • 8 tweets • 2 min read

1) Guys, where are the good old days when the market used to puke into the close? It is not the 0DTE as there were 0DTEs before

I cannot seem to remember exactly when was the last one but i don't remember seeing one for months. Similar with rallies but I can recall a couple 2) Full disclosure :

Recongnizing there was a seller today and a lot of stops beneath the lows I got some 393-392 $SPY put spreads for 12c around 2pm

Seemed quite cheap for an index with a catalyst sitting at a 0.4% loss for the day and a heavy trend to the lows.

Jan 31, 2023 • 6 tweets • 2 min read

Proud to announce that lately I have been doing VERY little in terms of buying and selling. Cuz if I had, I would have been thrown by that market left and right.

Hopefully, tomorrow we are finally gonna have some resolution to the choppiness. 🔪

Tickers 👇 Under the radar📡:

1. Relative strength: $XHB, $KRE, $XLI, $XLB
#relativestrength
2. Relative weakness: $FXI, $SOXX
#relativeweaknes

Jan 30, 2023 • 6 tweets • 2 min read

If you happen to follow us and read our weekly attempts to make sense out of markets,

you must know we expected some normalization after what happened on Friday.

When uber crap squuezes higher, it is usally a good sign that indices are due for a pause.

Today 👇 Under the radar📡:

1. Relative strength: $PFF, $PGX, $XLP
#relativestrength
2. Relative weakness: $SOXX, $XLV, $UNG & $USO, $XLE
#relativeweaknes

Jan 22, 2023 • 6 tweets • 2 min read

We all know how important risk management is!

But the there are so many different risk management approaches that the 'term' risk management does not encapsulate the processes behind it.

Here is how we do it on our trading floor: First and foremost we need to distinguish between the trading styles of traders. There is no one size fits all approach.

There are different rules for:
1. Short-term traders
2. Swing traders

Major differences?
1. You trade your daily PnL
2. You trade your portfolio performance.

Dec 26, 2022 • 6 tweets • 2 min read

I've been a trader for 16+ years and managed a trading floor for 10+ years.

Here are 4 crucial steps to take IF you want to significantly increase your chances to succeed as a trader: 1/ Start early:

Starting early gives you the opportunity to dedicate yourself to trading. The younger you are the less expectations on you to make money right away. After college you are expected to earn.

Needing to make money AT ANY time is the biggest performance killer.

Dec 23, 2022 • 5 tweets • 1 min read

Hawkish comments by ECB, BoJ and Fed surprised many investors who expected an upcoming pivot rather than more tightening.

But they underestimate the significance of China reopening after three years of lockdown.

It will have a massive impact. Here's my view👇 Chinese households are full of cash right now. 'Work & stay at home' lifestyle for such a long time impacted their savings in a big way. Now they are free to spend it

Nov 26, 2022 • 8 tweets • 2 min read

Want to become a better trader?

I bet you do.

Are you ready to do the work?

Are you ready to do the work consistently without finding reasons to skip it?

Very few do this important exercise called journaling. Can't blame them, its boring.

My template below 👇 How you get the most value out of your journal.

- You put down your thoughts daily and forget about them. Not much value there except for putting them down on paper.
- You gain value by tracking what problems and mistakes you had and how you tackled them in the past.

Nov 25, 2022 • 6 tweets • 1 min read

Big shift from active towards passive investing is materializing in the past years.

А few reasons why investors run away from portfolio managers 👇

1/

Achieving consistently successful active management has historically proven more difficult within select asset classes, such as among the stocks of large U.S. companies. Active equity managers find it hard to beat their benchmarks

2/

Nov 25, 2022 • 6 tweets • 2 min read

In markets, there is always something worth mentioning.

Even on slow days like today.

👇 Under the radar📡:

1. Relative strength : $KRE, $XLV, $XLU, $JETS
#relativestrength

2. Relative weakness: $QQQ, $AAPL, $FXI, $CL_F, $NG_F, $ATVI
#relativeweakness

Nov 23, 2022 • 4 tweets • 1 min read

Your portfolio might be in danger, if you don't consider the low probability but highly impactful events👇

Ignoring or underestimating the significance of a price shocks could result in a catastrophic loss—if not now, then sometime in the future.

1/

Black swan events (or price shocks) are large changes in price caused by unpredictable and significant events. While most traders don't think about them due to their low probability, they are the most common cause of catastrophic loss.

2/

Nov 23, 2022 • 6 tweets • 2 min read

Hope everyone feels loved and grateful the following days.

Before we all get the rest we deserve,

Here is what happened today 👇 Under the radar📡:

1. Relative strength : $TLT, $TSLA, $IGV, $ARKK, $JETS, $XLU
#relativestrength

2. Relative weakness: $CL_F, $KRE, $IWM
#relativeweakness

Nov 23, 2022 • 7 tweets • 2 min read

HEDGING

How should you do it IF you want to lower your hedging costs and improve the process in general.

Biggest question to ask yourself:

Cash US Treasuries and ETFs OR Futures?

Read my thoughts below 👇👇👇 Benefits of Futures

When you short futures you avoid paying the following fees:

1. Borrow fee for holding a short position
2. Daily interest (In the case of ETFs, you may pay a dividend if holding through ex-div date)
3. Slippage, it exists even in US Treasuries (USTs) and ETFs

Nov 22, 2022 • 6 tweets • 1 min read

Surviving bear markets requires you to manage both volatility and your emotions.

Although we try to approach trading from a logical perspective, our emotions can get in the way of sound decisions.

Why is it so difficult to avoid them? 👇

1/ Emotions can diverge from rational assessment

Bear markets are a breeding ground for emotions-based investing. The feeling of fear and a heightened sense of risk will be amplified by the behaviour of other people. Traders tend to act in herds.

2/

Nov 22, 2022 • 6 tweets • 2 min read

Slow and steady wins the race is not a phrase coined to explain the market but definitely fits well with what has been going on the last couple of days.

In case you have been busy procrastinating and in need of a summary,

this is what happened today👇 Under the radar📡:

1. Relative strength : $XME, $XLE, $XRT, $XLB
#relativestrength

2. Relative weakness: $JETS, $ARKK, $TSLA, $AMZN, $ITA, $DIS
#relativeweakness

Nov 21, 2022 • 4 tweets • 1 min read

Do you know the meaning of a 'zombie' company?

As shown by the chart below, the amount of zombie companies in the Russell is at its highest level in history. Much higher than what we saw during the internet bubble.

Here's why it matters 👇

1/

"Zombie" company is defined as one that cannot pay the interest on its debt from operating revenues. The term was applied to Japanese firms supported by Japanese banks during the period known as the Lost Decade

2/

Nov 21, 2022 • 6 tweets • 2 min read

A typical day of a trader:

Soon after the open - gotta short $XLE, gravitational pull finally. Crap, entry is gone, missed this one.

1h later, Saudi news out - quick, gotta get long $CL_F. Entry? Does not matter, load it up.

Flexability is everything.

Today 👇 Under the radar📡:

1. Relative strength : $DIS, $XLP, $XLU, $XME, $NUE
#relativestrength

2. Relative weakness: $XLE, $XOP, $XES, $HG_F, $EL, $COTY, $TSLA, $AMZN, $GOOG, $V, $MA
#relativeweakness

Nov 11, 2022 • 6 tweets • 2 min read

I was listening to @farnamstreet's episode with @Justinsua today. I loved the part around the 70th minute where he talked about the difference between losing and getting beaten. This resonated with me as I find it very applicable to the trading world. Why? 👇 First what it means to be losing:

- You haven't put your all in training
- You haven't put work in improving your skill
- You haven't optimized for food and nutrition

If it is something that you could have done but didn't, it is on you and you are losing.

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